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  1. 1. Workshop Outline <ul><li>Building Blocks – Definitions </li></ul><ul><li>Proposal Stage </li></ul><ul><li>Lunch Break </li></ul><ul><li>Subawards </li></ul><ul><li>Subcontracts </li></ul>
  2. 2. Workshop Outline <ul><li>Break </li></ul><ul><li>FDP Subaward Agreement </li></ul><ul><li>Monitoring, Invoicing, and Billing </li></ul><ul><li>A-133, Closeouts and Audits </li></ul>
  3. 3. Definitions
  4. 4. Basic Concepts <ul><li>Financial Assistance – Provides support or stimulation to accomplish a public purpose. Award is a grant or cooperative agreement . </li></ul>
  5. 5. Basic Concepts <ul><li>Procurement – Purchase of goods and services to accomplish a government purpose; services can include research. Award is a contract . </li></ul>
  6. 6. Definition of Award <ul><li>Financial assistance that provides support to accomplish a public purpose. </li></ul><ul><li>Includes grants and other agreements in the form of money or property in lieu of money by the federal government </li></ul>
  7. 7. Definition of Award <ul><li>Award does not include </li></ul><ul><ul><li>Technical assistance </li></ul></ul><ul><ul><li>Loans, loan guarantees, interest subsidies, insurance </li></ul></ul><ul><ul><li>Direct payments of any kind to individuals, nor… </li></ul></ul>
  8. 8. Definition of Award <ul><ul><li>Contracts, which are required to be entered into and administered under procurement laws and regulations </li></ul></ul>
  9. 9. Definition of Subaward <ul><li>Financial assistance made by a recipient to an eligible subrecipient </li></ul><ul><ul><li>Includes any financial assistance when provided by legal agreement, even if the agreement is called a contract </li></ul></ul>
  10. 10. Definition of Subaward <ul><ul><li>Does not include the purchase of goods and services </li></ul></ul>
  11. 11. Definition of Pass-Through Entity <ul><li>A non-federal entity that provides a federal award to a subrecipient to carry out a federal program </li></ul>
  12. 12. Definition of Recipient <ul><li>Organization receiving financial assistance from a federal agency to carry out a project or program </li></ul>
  13. 13. Definition of Recipient <ul><li>Term may include commercial, foreign or international organizations which are recipients and subrecipients </li></ul>
  14. 14. Definition of Subrecipient <ul><li>The legal entity to which a subaward is made and who is accountable to the recipient for the use of funds provided </li></ul>
  15. 15. Definition of Subrecipient <ul><li>See agency implementations of A-110 to determine what type of entity can be a subrecipient </li></ul><ul><li>Note guidance on distinguishing between a subrecipient and a vendor </li></ul>
  16. 16. Subrecipient Agreements <ul><li>Funding from a prime recipient to a subrecipient to carry out specific program activities </li></ul><ul><ul><li>May be termed a subgrant from an assistance award, or… </li></ul></ul>
  17. 17. Subrecipient Agreements <ul><ul><li>May be termed a subcontract from a procurement award </li></ul></ul>
  18. 18. Reference Documents <ul><li>OMB Circular A-21 </li></ul><ul><li>OMB Circular A-110 </li></ul><ul><li>OMB Circular A-113 </li></ul><ul><li>FDP Subrecipient Template </li></ul><ul><li>Code of Federal Domestic Assistance </li></ul>
  19. 19. Subrecipient vs. Vendor <ul><li>See OMB Circular A-133, __.210 </li></ul><ul><li>Subject to same audit standards as recipients </li></ul>
  20. 20. Subrecipient vs. Vendor <ul><li>Payments received for goods and services are vendor agreements and not subject to audit as subrecipient agreements </li></ul>
  21. 21. Characteristics of a Recipient <ul><li>Also applies to subrecipients </li></ul><ul><li>Determines who is eligible to receive what federal financial assistance </li></ul>
  22. 22. Characteristics of a Recipient <ul><li>Has performance measured against whether objectives of federal program are met </li></ul><ul><li>Has responsibilities for programmatic decisions </li></ul>
  23. 23. Characteristics of a Recipient <ul><li>Responsible for adherence to applicable federal program compliance requirements </li></ul>
  24. 24. Characteristics of a Recipient <ul><li>Uses federal funds to carry out a (research), compared to providing goods or services for a program </li></ul>
  25. 25. Characteristics of a Vendor <ul><li>Provides goods and services within normal business operations and to many purchasers </li></ul>
  26. 26. Characteristics of a Vendor <ul><li>Operates in a competitive environment </li></ul><ul><li>Provides goods and services ancillary to the operation of the federal program </li></ul>
  27. 27. Characteristics of a Vendor <ul><li>Not subject to compliance requirements of the federal program </li></ul>
  28. 28. Both Subrecipient and Vendor <ul><li>Substance of the relationship governs – need to know the detail of the relationship and desired outcomes </li></ul><ul><li>Use judgement </li></ul>
  29. 29. In Practical Terms <ul><li>Use subaward when intent is to have another organization carry out the scope of work described in the proposal </li></ul>
  30. 30. In Practical Terms <ul><li>Generally, two or more qualified entities work collaboratively on a sponsored project, each with its own principle investigator </li></ul>
  31. 31. In Practical Terms <ul><li>Performance measured against scope of work </li></ul><ul><li>Decides how to carry out own activities </li></ul><ul><li>PI may be author/coauthor on publications </li></ul>
  32. 32. In Practical Terms <ul><li>Retention of title to intellectual property it develops is common </li></ul>
  33. 33. For-Profit Subrecipients <ul><li>A-133 does not apply </li></ul><ul><li>Pass-through entity must establish requirements to ensure compliance by for profit subrecipient </li></ul>
  34. 34. For-Profit Subrecipients <ul><li>Include in agreement </li></ul><ul><ul><li>Applicable requirements and responsibilities </li></ul></ul><ul><ul><li>May use pre- and post-award audits, ongoing monitoring, reporting, etc. </li></ul></ul>
  35. 35. Today’s Terminology <ul><li>Subaward : Award to a subrecipient when prime award is assistance (grant or cooperative agreement) </li></ul><ul><li>Subcontract : Award to a subrecipient when prime award is procurement (contract) </li></ul>
  36. 36. <ul><li>Case Studies 1 & 2 </li></ul>
  37. 37. Proposal Stage
  38. 38. Reason For Subs <ul><li>Increasing emphasis on: </li></ul><ul><ul><li>Big Science – Big Solutions </li></ul></ul><ul><ul><li>Multidisciplinary Research </li></ul></ul><ul><ul><li>Inter-Institutional Research </li></ul></ul><ul><ul><li>Shift Administrative Burden </li></ul></ul>
  39. 39. Stages of Development <ul><li>Early Warning System </li></ul><ul><li>Forging Partnerships </li></ul><ul><li>Proposal Preparation </li></ul>
  40. 40. Early Warning System <ul><li>Pro-active Administration </li></ul><ul><ul><li>Office of big grants </li></ul></ul><ul><ul><li>Dissemination of announcement </li></ul></ul>
  41. 41. Early Warning System <ul><li>Pro-Active Faculty </li></ul><ul><ul><li>Tell the right people </li></ul></ul><ul><ul><li>Inform them early on </li></ul></ul>
  42. 42. Forging Partnerships <ul><li>Connected Faculty </li></ul><ul><li>Connected Institutions </li></ul><ul><li>Teaming Agreements </li></ul>
  43. 43. Teaming Agreements <ul><li>Address Relationship </li></ul><ul><li>Address Responsibilities </li></ul><ul><ul><li>Lead or sub </li></ul></ul><ul><li>Address Timing </li></ul>
  44. 44. Proposal Preparation <ul><li>Lead Institution </li></ul><ul><ul><li>Provide schedule </li></ul></ul><ul><ul><li>Coordinate writing </li></ul></ul><ul><ul><li>Prepare complete budget </li></ul></ul>
  45. 45. Proposal Preparation <ul><li>Subrecipient Institution </li></ul><ul><ul><li>Provide statement of work </li></ul></ul><ul><ul><li>Provide budget </li></ul></ul><ul><ul><li>Provide institutional approval </li></ul></ul>
  46. 46. Budgets <ul><li>Prime Budget </li></ul><ul><ul><li>Your institution’s costs </li></ul></ul><ul><ul><li>Subrecipient’s budget as a line item </li></ul></ul>
  47. 47. Budgets <ul><li>Sub Budget(s) </li></ul><ul><ul><li>Each subrecipient is separate </li></ul></ul><ul><ul><li>Each with own F&A and cost-sharing </li></ul></ul>
  48. 48. Checklist <ul><li>Statement of Work </li></ul><ul><li>Budget </li></ul><ul><li>Authorized Official’s Approval </li></ul>
  49. 49. <ul><li>Case Studies 3 & 4 </li></ul>
  50. 50. Subawards
  51. 51. Purpose of a Subaward <ul><li>Legal instrument </li></ul><ul><li>Protects agency’s and recipient’s interests </li></ul><ul><li>Flow-down necessary requirements of prime award </li></ul>
  52. 52. Prior Approval <ul><li>Prior approval is required “for transfer of any work under an award” (A-110, __.25(c)(8)) </li></ul><ul><ul><li>excludes supplies, material, equipment or general support services [vendor agreement] </li></ul></ul>
  53. 53. Prior Approval <ul><li>Inclusion in proposal constitutes prior approval </li></ul><ul><li>If for “research,” prior approval waived (A-110, __.25(e)(4)) </li></ul><ul><li>Some agencies have specific implementations. </li></ul>
  54. 54. Documentation <ul><li>Subawards are not subject to procurement requirements of OMB A-110 (__.40 to __.48), such as: </li></ul><ul><ul><li>Open competition </li></ul></ul><ul><ul><li>Cost/price analysis </li></ul></ul>
  55. 55. Documentation <ul><li>Stewardship - documentation for subawards should be consistent with good management practices… </li></ul>
  56. 56. Documentation <ul><li>Scope of Work </li></ul><ul><li>Budget, consistent with federal sponsor’s requirements </li></ul><ul><li>All required representations, certifications, and assurances </li></ul>
  57. 57. Documentation <ul><li>Signature by authorized official of subrecipient (not PI), indicating commitment to SOW, assuring reasonableness and accuracy of proposed costs, and agreeing to negotiate a subaward if proposal is awarded </li></ul>
  58. 58. Subrecipient Assessment <ul><li>Ability to perform successfully: </li></ul><ul><li>Integrity </li></ul><ul><li>Past performance </li></ul><ul><li>Technical/financial resources </li></ul><ul><li>Debarment/Suspension </li></ul>
  59. 59. Types of Subawards <ul><li>Cost-Reimbursement </li></ul><ul><ul><li>Standard </li></ul></ul><ul><li>Fixed-Price </li></ul><ul><ul><li>Rarely used </li></ul></ul>
  60. 60. Subaward Content <ul><li>Identifying information </li></ul><ul><ul><li>CFDA number </li></ul></ul><ul><ul><li>Prime funding source </li></ul></ul><ul><ul><li>Prime award number </li></ul></ul>
  61. 61. Subaward Content <ul><ul><li>Statement of Work </li></ul></ul><ul><ul><li>Key Personnel </li></ul></ul><ul><ul><li>Period of Performance </li></ul></ul><ul><ul><li>Subaward Type (CR/FP) </li></ul></ul><ul><ul><li>Amount </li></ul></ul>
  62. 62. Subaward Content <ul><ul><li>Invoicing/payment </li></ul></ul><ul><ul><li>Prior approval requirements </li></ul></ul><ul><ul><li>Cost-sharing requirements </li></ul></ul><ul><ul><li>Reporting requirements </li></ul></ul><ul><ul><li>Audit requirements </li></ul></ul>
  63. 63. Subaward Content <ul><ul><li>Intellectual property terms </li></ul></ul><ul><ul><li>Equipment terms </li></ul></ul><ul><ul><li>Indemnification </li></ul></ul><ul><ul><li>Termination </li></ul></ul><ul><ul><li>Applicable cost principles </li></ul></ul>
  64. 64. Subaward Content <ul><ul><li>Certs/Reps/Assurances </li></ul></ul><ul><ul><li>Flow-down requirements </li></ul></ul>
  65. 65. Flow-Downs <ul><li>Substitution of nomenclature </li></ul><ul><ul><li>Flow-downs must accurately reflect relationship between parties </li></ul></ul><ul><ul><li>Can be implemented by introductory paragraph </li></ul></ul>
  66. 66. Subrecipient Issues <ul><li>Foreign Subrecipients </li></ul><ul><ul><li>Public policy requirements (HS/AS, Assurances) </li></ul></ul><ul><ul><li>Payment, accounting practices </li></ul></ul>
  67. 67. Subrecipient Issues <ul><li>Commercial/Industrial </li></ul><ul><ul><li>Cost principles (FAR 31.2) </li></ul></ul><ul><ul><li>Profit/Fee (unallowable under some awards) </li></ul></ul><ul><ul><li>Intellectual Property </li></ul></ul>
  68. 68. Subrecipient Issues <ul><li>Small Business </li></ul><ul><ul><li>Potential conflict of interest (PI/institutional) </li></ul></ul><ul><ul><li>Cash flow/advance payments </li></ul></ul><ul><ul><li>Intellectual property </li></ul></ul>
  69. 69. <ul><li>Case Studies 5 & 6 </li></ul>
  70. 70. Subcontracts
  71. 71. Regulations <ul><li>Federal Acquisition Regulations (FAR) </li></ul><ul><ul><li>Title 48 of the Code of Federal Regulations </li></ul></ul>
  72. 72. Documentation <ul><li>Basis for subcontract selection </li></ul><ul><ul><li>Open competition/sole-source </li></ul></ul><ul><ul><li>Subcontractor Reliability </li></ul></ul><ul><ul><li>Cost/Price Analysis </li></ul></ul>
  73. 73. Documentation <ul><li>Difference between proposed and final amounts </li></ul><ul><li>Contract Type </li></ul><ul><li>Non-standard requirements </li></ul>
  74. 74. Prior Approval <ul><li>Addressed at FAR 52.244-2 </li></ul><ul><li>Required for all subcontracts: </li></ul><ul><ul><li>Cost-Reimbursement </li></ul></ul><ul><ul><li>Time & Material </li></ul></ul><ul><ul><li>Labor Hour </li></ul></ul>
  75. 75. Prior Approval <ul><li>Or, are fixed-price and exceed </li></ul><ul><ul><li>greater of $100,000 or 5% (DoD, NASA, Coast Guard); or </li></ul></ul><ul><ul><li>$100,000 or 5% (civilian) </li></ul></ul>
  76. 76. Prior Approval <ul><li>Unless, purchasing system has been approved through CPSR </li></ul><ul><li>Contractor Procurement System Review (FAR 44.3) </li></ul>
  77. 77. Types of Subcontracts <ul><li>Cost-Reimbursement – normal for R&D </li></ul><ul><li>Fixed-Price – normal for service & supply contracting. May be used for greater control over subcontractor performance </li></ul>
  78. 78. Flow-Downs <ul><li>As written </li></ul><ul><li>By content </li></ul><ul><li>By operation of law </li></ul><ul><li>That assist in compliance with requirements of prime </li></ul>
  79. 79. For-Profit Subcontractors <ul><li>Cost-Principles – FAR 31.2 </li></ul><ul><li>Admin. Requirements – FAR </li></ul><ul><li>Verify rates with DCAA </li></ul><ul><li>Profit/Fee needs scrutiny (7% is normal, 15% is maximum) </li></ul>
  80. 80. Subcontracting Plan <ul><li>If over $500,000, and required of contractor </li></ul><ul><li>Review plan for completeness </li></ul><ul><li>Incorporate into subcontract </li></ul><ul><li>Incorporate their data into yours </li></ul>
  81. 81. <ul><li>Case Study 7 </li></ul>
  82. 82. FDP Subaward Agreement
  83. 83. Subaward Agreement Form <ul><li>Federal Demonstration Partner-ship Project </li></ul><ul><li>Applicable to all A-110 institutions, not just FDP </li></ul><ul><li> </li></ul>
  84. 84. OMB Circular A-110 Remember Definitions <ul><li>Award – financial assistance </li></ul><ul><li>Contract – procurement </li></ul><ul><li>Subaward financial assistance, not procurement </li></ul>
  85. 85. Subaward Agreement Form <ul><li>Refer to Handout </li></ul>
  86. 86. ID Section <ul><li>Identify Parties </li></ul><ul><li>Identify Prime and Sub Numbers </li></ul><ul><li>Identify Sponsor and CFDA Number </li></ul>
  87. 87. ID Section <ul><li>Identify Period of Performance </li></ul><ul><li>Identify Amount </li></ul><ul><li>Identify Project Title </li></ul><ul><li>Identify Non-Financial Reporting Requirements </li></ul>
  88. 88. Terms and Conditions <ul><li>Award Identification </li></ul><ul><ul><li>Cost reimbursable </li></ul></ul><ul><ul><li>Identify statement of work </li></ul></ul>
  89. 89. Terms and Conditions <ul><li>Financial Terms </li></ul><ul><li>Notifications </li></ul><ul><li>Liability </li></ul><ul><li>Termination and Extensions </li></ul><ul><li>Other Terms </li></ul>
  90. 90. Signatures <ul><li>Authorized Officials </li></ul>
  91. 91. Attachment 1 <ul><li>Required Certifications </li></ul><ul><ul><li>Lobbying </li></ul></ul><ul><ul><li>Debarment </li></ul></ul><ul><ul><li>A-133 </li></ul></ul>
  92. 92. Attachment 2 <ul><li>Agency Specific Terms </li></ul><ul><li>Special Terms and Conditions </li></ul><ul><li>Institutional Variations </li></ul>
  93. 93. Attachment 3 <ul><li>Contacts Page </li></ul>
  94. 94. Attachment 4 <ul><li>Reporting Requirements </li></ul>
  95. 95. Attachment 5 <ul><li>Statement of Work </li></ul><ul><li>Budget </li></ul>
  96. 96. <ul><li>Case Studies 8, 9 & 10 </li></ul>
  97. 97. Monitoring, Invoicing & Billing
  98. 98. Basic Considerations <ul><li>Advance payment allowed in A-110 when prime gets advance payments </li></ul>
  99. 99. Basic Considerations <ul><li>Timing Issues </li></ul><ul><ul><li>Payments and invoices </li></ul></ul><ul><ul><li>Financial status reports </li></ul></ul><ul><ul><li>“Expenditure rate” issues </li></ul></ul>
  100. 100. Format of Invoices <ul><li>Specify level of detail desired in subrecipient agreement, but it should normally include… </li></ul>
  101. 101. Format of Invoice <ul><ul><li>Salaries </li></ul></ul><ul><ul><li>M&S </li></ul></ul><ul><ul><li>Travel </li></ul></ul><ul><ul><li>Cost-Sharing </li></ul></ul><ul><li>Equipment </li></ul><ul><li>F&A (rate and amount </li></ul><ul><li>Totals </li></ul><ul><li>Current month and cumulative: </li></ul>
  102. 102. Subaward Monitoring – Financial <ul><li>Track subrecipient allocations separately </li></ul><ul><li>Assessment of correct F&A, first $25K </li></ul>
  103. 103. Subaward Monitoring – Financial <ul><li>Process for review and approval of invoices </li></ul><ul><ul><li>PI for programmatic </li></ul></ul><ul><ul><li>OSP for administrative/ financial </li></ul></ul>
  104. 104. Subaward Monitoring – Financial <ul><li>Reimbursement for disallowances </li></ul><ul><li>Verify cost-sharing commitments </li></ul>
  105. 105. Subaward Monitoring – Technical <ul><li>Scientific Progress </li></ul><ul><li>Invention Reports </li></ul><ul><li>Timely Submission of Deliverables </li></ul><ul><li>Final Reports </li></ul>
  106. 106. Cost-Sharing Issues <ul><li>What did the proposal promise? </li></ul><ul><li>What is in the subrecipient agreement? </li></ul><ul><li>What documentation? </li></ul><ul><li>Who monitors? </li></ul>
  107. 107. Closeout and Audit <ul><li>Close sub before closing prime </li></ul><ul><li>Documentation </li></ul><ul><ul><li>Assistance awards </li></ul></ul><ul><ul><li>Contract awards </li></ul></ul><ul><li>Audit </li></ul>
  108. 108. Assistance Awards Closeout <ul><li>Final Invoice </li></ul><ul><li>Final Technical Report </li></ul><ul><li>Final Invention Report </li></ul><ul><li>Final Property Report </li></ul>
  109. 109. Assistance Awards Closeout <ul><li>PI Certification </li></ul><ul><ul><li>Technical aspects </li></ul></ul><ul><ul><li>Expenditures reasonable </li></ul></ul>
  110. 110. Contract Awards Closeout <ul><li>Subcontractor’s Certification </li></ul><ul><li>Subcontractor’s Release </li></ul><ul><li>Subcontractor’s Assignment of Rebates, Credits, Other Amounts </li></ul>
  111. 111. Contract Awards Closeout <ul><li>Small Business Contracting Report, if required </li></ul>
  112. 112. Audit Responsibilities <ul><li>Prime sets forth formal procedures for audit and monitoring </li></ul><ul><li>Certificate of compliance with A-133 compliance supplement </li></ul>
  113. 113. Audit Responsibilities <ul><li>Documentation for subrecipients not subject to A-133 </li></ul><ul><li>Issue management decision/ follow up </li></ul>
  114. 114. Audit Responsibilities <ul><li>Determine whether repayment and adjustment to pass-through entity’s records is appropriate </li></ul>
  115. 115. Cost/Price Analysis <ul><li>Assessment required of total costs </li></ul><ul><ul><li>Desk review </li></ul></ul><ul><ul><li>Full audit of direct and F&A costs </li></ul></ul><ul><li>Formal Audit over $500K </li></ul>
  116. 116. Cost/Price Analysis <ul><ul><li>Risk Assessment </li></ul></ul><ul><ul><ul><li>Amount of agreement </li></ul></ul></ul><ul><ul><ul><li>Subs performance under other awards </li></ul></ul></ul><ul><ul><ul><li>Type of subrecipient organization </li></ul></ul></ul>
  117. 117. Audit Steps <ul><li>Verify F&A Rate </li></ul><ul><li>Review most recent A-133, where appropriate </li></ul><ul><li>If not subject to A-133, may request assist audit, or perform audit yourself </li></ul>
  118. 118. Steps in Desk Review <ul><li>Compare and verify F&A </li></ul><ul><li>Within total cost of subrecipient agreement </li></ul><ul><li>Reasonable and accurate </li></ul><ul><li>Cost-sharing </li></ul>
  119. 119. Steps in Desk Review <ul><li>Confirm programmatic work completed </li></ul><ul><li>Special requirements for other types of agreements, used sparingly for research </li></ul>
  120. 120. <ul><li>Case Studies 11 & 12 </li></ul>
  121. 121. Q & A